MF wrap: AUM of B30 cities fell 11% in first half of FY19

In the first six months, S&P BSE Sensex rose 10 percent, but September alone, S&P BSE Sensex lost more than 2,400 points, or 6.2 percent

In the first six months of the current financial year (FY19), the assets under management (AUM) from B30 cities registered a fall of 11.29 percent or Rs 45,441 crore, as per the data on the Association of Mutual Funds in India.

According to SEBI, T30 refers to the top 30 geographical locations in India and B30 refers to the locations beyond the top 30.

Experts attributed the fall in assets to intermittent bouts of volatility in the equity market during the review period.

"The higher equity market volatility has pulled down the AUM of B30 cities as large part of the money in equities is from B30," said a fund manager from a bank-sponsored fund house.

The asset mix of B30 cities continues to be largely inclined towards equities. As per AMFI, 65 percent of the B30 AUM as of April-end came into equity schemes in September.

On the other hand, allocation to equities increased in T30 cities to 38 percent from 36 percent during the period under review.

Going by the outflow data on AMFI, in the last few months, the industry witnessed strong inflows in equity schemes while debt schemes reported net outflows in AUM.

In the first six months, S&P BSE Sensex rose 10 percent, but in September alone, S&P BSE Sensex lost more than 2,400 points or 6.2 percent. It was the worst fall reported in September since 2008 when Sensex fell by about 10 percent.

Trade war woes, rising global crude oil price, which breached $83 per barrel level, rupee depreciation against dollar at a record level near Rs 73/$, liquidity concerns in NBFCs, hike in interest rates by US Fed rate, and rising concerns around weak macros are some of the factors which took a toll on markets. This may have contributed to the fall in debt contribution in T30 cities.

In terms of retail AUM, 22.31 percent was from B30 cities while the balance came from T30 cities in September.

The concentration of corporates in major cities led to 94.04 percent of the institutional AUM coming from T30 cities.

Overall, all 40 percent of the industry assets came through the direct route in September. Majority of these assets were in non-equity schemes, which see maximum investments from corporates.

The liquid and money-market schemes which usually witnesses higher corporate participation registered 70 percent direct investments while the debt category recorded direct investments to the tune of 47 percent.